Cal App Ct Denies Pre-Condemnation Damages

by: Joseph Grather
27 Aug 2013

A California Court of Appeals panel recently reversed a trial court decision which was favorable to a property owner in Dep’t of Transportation v. McNamara.  The issue on appeal was limited to whether the property owners were entitled to pre-condemnation damages as a matter of law.  The trial court awarded the property owner pre-condemnation damages in the amount of $400,000, which also triggered a statutory right to payment of attorneys’ fees and costs of suit totaling over $600,000. (The underlying jury award of $1,200,000 for just compensation was not challenged on appeal).

In California, “a property owner may be entitled to pre-condemnation damages if the owner demonstrates that “(1) the public authority acted improperly either by unreasonably delaying eminent domain action following an announcement of intent to condemn or by other unreasonable conduct prior to condemnation; and (2) as a result of such action the property in question suffered a diminution in market value.”  The court reiterated that “losses occasioned by a general decline in the property value . . . occurring prior to the date of taking must, however, be borne by the property owner.” (Slip op. at 8).

However, the Appellate Court found that the owners had not submitted any evidence that the Department of Transportation caused the decline in property value.  In fact, their own appraiser admitted that the decline in value between 2006 (date of initial notice) and 2008 (date of complaint) was due to a general decline in market value.

While not characterized as pre-condemnation damages, New Jersey has similar rules designed to protect property owners from damages caused by a condemnor’s conduct pre-complaint.  Statutory law provides that the date of value shall be the earliest of four possible dates, one of which being the date some action by the condemnor substantially affected the property owner’s use and enjoyment of the property.  LIke McNamara, there must be evidence that it was the condemnor’s conduct that affected the property, not a general decline in market value. See e.g. Tp. of West Windsor v. Nierenberg, 150 N.J. 111 (1997).

Perhaps McNamara is also a cautionary tale.  It appears that their house was originally slated as a total taking (which would have been accomplished in 2006 at the peak of the market), but the owners successfully pleaded with DOT for a highway redesign “to save their house” that resulted in a partial taking that stripped the house of driveway access, placed the highway right-of-way within 21 feet of the front door, and delayed acquisition until mid-2008, just as the market was hitting bottom.  As they say, be careful what you wish for, you just might get it.

When one receives notice of a potential condemnation of their private property, it should be evaluated from all viewpoints before taking any action that may affect one’s property rights.